Making it on volume

With respect to mergers and acquisitions, it would appear retailers have become more high-margin hawkers than volume merchants in the past year, since there was more money spent on fewer deals this year when compared to 2001. Through Aug. 22, the dollar volume of retail industry M&A totaled $8.3 billion in 128 deals. That's a rebound from the sector's five-year M&A low of $6.9 billion (234 deals) reached in 2001, according to research firm Dealogic.

The biggest M&A ticket item so far this year was the $2 billion purchase offer for Lands' End Inc., a Dodgeville, Wis.-based catalog and Internet retailer, by Sears, Roebuck and Co. (Morgan Stanley advised Sears while Lands' End received counsel from Peter J. Solomon Co.) The next most expensive item on this year's M&A rack involved Columbus, Ohio-based Intimate Brands Inc. The Limited Inc. agreed to acquire the remaining 16.3% of Intimate Brands it did not already own for $1.6 billion. (Banc of America Securities LLC and Goldman, Sachs & Co. advised The Limited, while Credit Suisse First Boston provided counsel to Intimate Brands.)

Last year's deals pale by comparison. In fact, the largest through the same period in 2001 was the $518.4 million bargain-basement price Luxottica Group SpA agreed to pay for Sunglass Hut International Inc.